I find there are so many schools of thought about measuring and giving the company direction, and yet still, I encounter companies that don’t know what to work on, or how to prioritise, or how to get from A to B. Its easy to fall into the trap when you’re running a business of focusing on the most immediate problems, or to end up working on issues that whilst important, don’t help to move the business forwards.
I like to start with a company’s goals – ultimately this is a vision of what the company wants to become, in a 3 – 5 year time frame, its important to note that the goal is something visionary and leading (i.e. the company can impact), we don’t want a goal that is a lagging goal, meaning that reaching the goal is not directly influenced by the company’s efforts, e.g. becoming publicly listed is a pretty poor goal since getting listed is largely out of the control of the business; on the other hand a goal like grow to XYZ revenue is more in-line with something the business can impact.
One you have goals, you should be working on the business model, unit economics and scorecard and metrics – the goal here is to have a clear map of how the revenues, costs, unit economics and related numbers interact with each other, and how they map towards the end goal. This should give you a map of the elements of the model that need to be influenced in order to reach your desired goal, e.g. you should be able to identify an x% improvement in a certain metric over a defined period of time should result in a change in the results of the business of Y.
So in this way, your metrics will give you a list of areas to focus on. This is the starting point for your initiatives. First think about which of these metrics is the most important to address first, you want to be prioritising which are going to influence the success of your business. Once you’ve done this, you then want to look at what initiatives or experiments you’d need to conduct to influence each of these metrics.
As you can see, you now have a list of initiatives, tied to a list of metrics in order of priority, which all link back to the business plan and goals of the business.
From here, take the initiatives and defined them as OKRs, you can make an initiative an objective or a KR. – what matters at this stage is prioritisation, focus and accountability.